Cho Jae-2012-China-3323 ( October 03, 2014)

A personal service exempt from value-added tax shall fall under work similar services or labor services.

Even if there is no direct receipt of activity expenses, it constitutes a payment for performing the affairs under the service contract, and thus includes the plaintiff's business income amount. The disposition imposing value-added tax is legitimate because it does not fall under similar services or labor services subject to the VAT exemption.

Suwon District Court 2014Guhap5385

김ㅇㅇ

port of origin

September 15, 2015

November 17, 2015

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The defendant's statement of imposition of value-added tax on the plaintiff on the date of each disposition listed in the separate sheet of "the date of disposition of global income tax" shall revoke all the imposition of value-added tax and penalty tax on the plaintiff on the date of each disposition in the separate sheet of "the date of disposition of global income tax" and "the date of disposition of value-added tax".

1. Details of the disposition;

A. Conclusion of the instant service contract

(1) On June 1, 200, the Plaintiff entered into a contract (hereinafter “instant service contract”) with AA Co., Ltd. (hereinafter “AA”), a Canadian corporation, which is engaged in the business of manufacturing aircraft and rolling stock, as follows:

1.1Subject to the terms and conditions of this Agreement, AA shall appoint the Plaintiff as a non-exclusive sales representative of AA for the sale of AA products in the area listed in Annex A to this Agreement.

1.2 During the term of this Agreement, the Plaintiff shall:

(i) shall make every effort to ensure that AA is consistent and continued to a satisfactory level:

(a) Establishment of a market and a sales basis for contractual products within the contract area and a prospect for the projects and activities described in detail in the detailed scope of the project and activities of the extraordinary B representatives;

(b) facilitate the maintenance and increase of sales of contract products used in the contracting area;

c) continues to provide AA with information about sales campaigns for competing products in the contract area.

d) reporting as ordered to the financial status of the potential customer with respect to contract products within the contract area.

(e) the implementation of such other services as AA may reasonably request from time to time, including support for marketing programs for AA contract products.

(ii) a monthly report stating the name and position of senior personnel as well as their names, addresses, etc. that AA may participate in the purchase with respect to the potential purchaser of the contract product;

(Entry of Current and Future Product Market Status in the Contract Area) shall be submitted to A in accordance with Section 5.1 of this Agreement and shall be provided to A in the form and content that AA may request additional information and confirmation related to the plaintiff's activities under this Agreement.

iii) The costs and expenses incurred in relation to the Plaintiff’s activities under this Agreement shall be borne by the Plaintiff’s own expense and shall be discharged from liability related to all kinds of expenses, etc. that A does not have to bear explicitly in writing and shall not be harmful. The Plaintiff shall attach a certified copy of AA’s approval, reference materials, and detailed items of the costs to claim compensation for the expenses explicitly expressed in writing by AA in advance.

1.3In the performance of the services set out in this Agreement, the Plaintiff does not carry out, without prior written consent of AA, the following:

i) acting as an agent or employee of AA or representing himself. The Plaintiff shall always serve as an independent contractor.

(ii) accept, approve, or conclude an order, contract, or other agreement on behalf of, or in its name;

(iii) represents AA in connection with the sale of any product or service other than a contract product, or receiving remuneration from A in connection therewith; or

iv) appointing an agent to act on behalf of the Plaintiff in connection with this contract;

Article 2 Remuneration

2.1 AA shall pay 10,000,000 won per month to the Plaintiff as full compensation for all expenses incurred and incurred under this Agreement, which are caused and brought about by the Plaintiff in advance pursuant to Section 1.2(iii) of this Agreement with respect to such duties and duties performed by the Plaintiff.

2.6 The remuneration to be paid to the Plaintiff under this Agreement shall be paid either by means of a check to the Plaintiff’s address or by means of a telegraph transfer to the Plaintiff’s bank account in the contract area as set out in Section 5.1 of this Agreement. If it is deemed impossible to pay the remuneration to the Plaintiff as set out above, AA shall consider it as appropriate on its own, and pay it in writing

In that case, all obligations related to the payment of the amount to be paid to the Plaintiff under this contract shall be exempted.

2.7 In any case, AA does not, in any way, require the Plaintiff to pay or increase the remuneration or to compensate the Plaintiff for the expenses or obligations it submitted to the Plaintiff with respect to the Plaintiff’s work or the following matters:

A. B The detailed scope of the Plaintiff’s business

The plaintiff advertises and marketing the following products and services:

1. Binding metal system

2. Large-scale automatic electric metal system and high-speed passenger transport means using type or existing circuits;

(2) On January 26, 2007, A transferred the railroad transport business sector to BB Co., Ltd. (BB; hereinafter referred to as “B”), the subsidiary company, and accordingly, the instant service contract relationship was succeeded from A to BB. (b) the receipt of the instant service expenses, etc.

"CC (hereinafter "CC") as a local corporation of AA from 2007 to 2010 paid to the Plaintiff KRW 1,505,000,000 as activity expenses in relation to the instant service agreement. During the same period, the Plaintiff claimed and paid KRW 1,890,000,000 (hereinafter "the instant activity expenses") for the sum of KRW 1,505,000,000 (hereinafter "the instant activity expenses") to B and B during the same period, from 2005 to 2007, the Plaintiff received from A and B 527,00,000,000,000 as piece rate expenses in relation to the instant service agreement (hereinafter "the instant activity expenses").

C. The defendant's disposition of this case

The Defendant: (a) considered the total amount of the instant service costs and the instant activity expenses as the Plaintiff’s business income and imposed global income tax on the Plaintiff from 2007 to 2010 as stated in the attached Table 1; and (b) imposed value-added tax on the Plaintiff from the first to the second period of 2010 on the grounds that the Plaintiff is a taxable business entity and is obligated to report and pay value-added tax; and (c) imposed value-added tax on the Plaintiff from the first to the second period of 2005 as stated in the attached Table 1.

[Ground of Recognition] Facts without dispute, Gap evidence 1-1, 2, 2-2, 3-1 through 7, 5, 6, 10, Eul evidence 1-1 through 10, 2-1 through 7, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's cause of claim

1) Of the instant activity expenses, KRW 385,00,000, which was not actually paid by the Plaintiff (hereinafter “the instant non-receiving activity expenses”) is merely a portion of the Plaintiff’s business income that was compensated for the expenses incurred under a separate contract entered into with AA, etc. by theCC, etc., and cannot be deemed as the Plaintiff’s business income.

2) The Plaintiff, as an individual, provided services in accordance with the instant service agreement in an independent capacity without employing a worker without physical facilities, and received the payment for such services depending on the work performance, and thus, is exempt from value-added tax.

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. As to the Plaintiff’s assertion as to the Plaintiff’s aforementioned A-1

In addition to the evidence No. 4, No. 18, No. 19, and No. 3 through 5, and the fact-finding results with respect toCC in this court, and the overall purport of the argument results for the plaintiff himself/herself, the following facts and circumstances may be acknowledged. In addition, as seen below, even if the plaintiff did not directly receive the expenses for the non-receiving activities of this case, even if the plaintiff did not directly receive the expenses for the non-receiving activities of this case, it is reasonable to view that the expenses for the non-receiving activities of this case constitute the consideration that the plaintiff received from B in order to perform the affairs under the service contract of this case, and therefore are included in the amount of business income of the plaintiff.

(1) The instant non-receiving activity cost consists of KRW 82,709,000, office rent of KRW 238,985,000, office maintenance cost of KRW 30,023,00, and management information system usage fee of KRW 33,346,00.

(2) In the course of the instant service agreement, the Plaintiff used the place of business of theCC, such as holding business-related meetings at the offices of theCC. The Plaintiff was assisted by her son, hotel, and flight arrangement, foreign visitors management, office fixtures management, office fixtures management, cost receipt processing, document preparation, etc. from the staff, including the secretary, etc. belonging to theCC. The Plaintiff was treated as activity expenses of the instant non-receiving case.

(3) During the period of performing the affairs under the instant service contract, the Plaintiff prepared a security report (EP Re-report) and reported the details of the use of the activity to B. B while approving the expenditure, the Plaintiff sent the monthly real report to the Plaintiff, which was recorded that the Plaintiff paid the employee expenses, office expenses, facility management expenses, and depreciation costs each month.

(4) On behalf of the Defendant at the time of the Defendant’s tax investigation,CC submitted a written confirmation that it paid the Plaintiff the full amount of the instant activity expenses, including the instant non-receiving activity expenses, to the Plaintiff. The Plaintiff also submitted a written confirmation with the same content to the Defendant.

(5) On August 12, 2009,CC entered into a contract with a collaborative company (market marketing, sales and market development, long-term strategies, management policies, project management, etc.) and business management services (corporate governance process establishment and implementation, cooperation personnel participation and support, etc.) (hereinafter “instant cooperative contract”) with a cooperative company (market governance process establishment and implementation, cooperation personnel, etc.) as a result of the provision of services at the request of BB pursuant to the instant cooperative contract. On the request of BB, it may provide services and receive expenses for the provision of services from BB. However, since the above cooperative contract applies to the provision of services at the request of BB, it is not reasonable to deem that the Plaintiff provided services at the request of B, etc. under the instant service contract or the provision of services directly to the Plaintiff as a result of the request for the provision of services at the request of the Plaintiff. Accordingly, it is not reasonable to deem that the Plaintiff provided services at the request of CC separately from the office service contract at the request of the Plaintiff.

Ultimately, the plaintiff's above assertion is without merit.

D. As to the Plaintiff’s assertion as to the Plaintiff’s above A-2

1) Article 12(1)14 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) provides that “The supply of personal services by low-income earners, musicians, and other persons prescribed by Presidential Decree, for occupation, shall be exempted from value-added tax.” Article 35(1)14 of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013) provides that “personal services under Article 12(1)14 of the Act are exempt from value-added tax because they constitute “personal services that are supplied without physical facilities prescribed by Ordinance of the Ministry of Strategy and Finance, and are supplied to individuals as independent services and for which allowances or other services of a similar nature are provided according to daily performance.” Article 12(1)35 of the former Enforcement Rule of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013). 2013).

2) In full view of the following facts and circumstances revealed in light of the purport of the entire arguments as to the instant case’s health class and the aforementioned evidence, the Plaintiff appears to have created added value by combining not only his own labor force but also other physical and human factors in performing the instant service contract. Thus, the service provided by the Plaintiff pursuant to the said service contract cannot be deemed as labor similar or labor services.

(1) According to the instant service contract, the Plaintiff is obligated to provide market research on high-speed passenger transport means, including the electric metal system, the establishment of sales forecast values, marketing activities, and the survey of potential customers’ financial status. The Plaintiff himself/herself also claims that the Plaintiff’s performance of the service performance under the instant contract, such as the Plaintiff’s business of Kimhae-si, Incheon Airport Railroad, the construction business of the Incheon Airport Railroad, the construction business of the Tae-Gyeong Railroad, the Jeju Aviation, and the supply of aircraft for aviation, etc.

(2) The Plaintiff also has engaged in the work of "CC's employee on behalf of the Plaintiff," such as response, hotel, and flight arrangement, management of foreign visitors, management of office fixtures, management of cost receipts, preparation of documents, etc. Therefore, it is difficult to view that the Plaintiff's employee merely provided temporary assistance to the Plaintiff in light of the continuation and repetition of the above work.

(3) In light of the content and nature of the service performed by the Plaintiff in accordance with the instant service contract, and the nature of the contract concluded as a result, the service performed by the Plaintiff appears to have been meeting from time to time with the executives and employees of BB orCC in the course of performing the instant service contract. In light of such circumstances, the Plaintiff appears to have been essential for the office space, such as the office space where confidentiality or security is maintained to perform the instant service contract.

(4) 원고는 당사자본인신문 당시 CC 직원이 손님 접대를 도와주었다고 진술하였는바, 위 진술에 의하더라도 CC의 사무실은 이 사건 용역계약의 수행과 관련하여 손님이 원고를 방문하기 위한 장소로 사용된 것으로 보인다. 또한, 원고는 당사자본인 신문 당시 '간단한 사업이 아니고 큰 사업이어서 최소한 6~9개월 정도 소요되고 본사에서 20명 정도의 사람이 오면 CC의 사무실이 좁아서 ㅇㅇ호텔에 사무실을 차려놓고 사업을 진행하기 때문에 사업이 한창 진행될 때에는 자주 갈 수도 있다.'라고 진술하였는바, 이러한 진술에 비추어 원고가 CC의 사무실을 단순히 방문한 것이 아니라 이 사건 용역계약에 따른 사무집행을 위한 장소로서 계속적, 반복적으로 이용하였던 것으로 보인다.

(5) On April 30, 2012, the Plaintiff was notified by BB to the effect that the instant contract was suspended in relation to the investigation by the prosecution against the Plaintiff and the access to theCC office was denied. If the Plaintiff was simply visiting theCC office, the Plaintiff did not take any measures to deny access to theCC office in relation to the suspension of the Plaintiff’s work. Such notification is premised on the Plaintiff’s continuous and repeated use of theCC office as a place for performing affairs in accordance with the instant service contract. The Plaintiff appears to have been able to access to or use the data or information required for security at that place.

(6) The Plaintiff spent activity expenses with the corporate card in the name ofCC and submitted it to BB for approval. According to this, the Plaintiff spent the activity expenses of KRW 1,890,000,000 from 207 to 2010, and among them, the amount of KRW 385,00,000 which was not received activity expenses of this case was appropriated for the maintenance expenses of office, etc. As such, the Plaintiff appears to have spent the remainder of KRW 1,505,00,000 which was spent for the construction of a human network, even in view of the fact that a certain amount of expenses was spent for the construction of a human network, it appears to have been used for the employment of experts, and under the monthly real report prepared by BB, it is confirmed that the Plaintiff paid the amount at the advisory expense of each month.

3) Therefore, the Plaintiff’s above assertion is without merit.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so decided as per Disposition.